2012 (5) TMI 681 - AT - Income Tax

Summary

Issues Involved: Cross appeals for the assessment year 2003-04 regarding permanent establishment in India, applicability of sec. 40(a)(ia), disallowance u/s.40(a)(i) for payments made to various entities.

Assessee's Appeal (ITA No.3866/Mum/2008):
- Ground nos.1 & 2: Whether the assessee has a permanent establishment in India.
- Held that the assessee has no permanent establishment in India, consistent with previous assessment years.
- Ground no.3: Applicability of sec. 40(a)(ia).
- Not pressed by the counsel and hence dismissed.
- Ground no. 4: Disallowance u/s.40(a)(i) for payment to Advanced Satellite (UK).
- Allowed in favor of the assessee based on previous decision.
- Ground no.5: Disallowance u/s.40(a)(i) for payment to LMB Holdings (Mauritius) Ltd.
- Disallowance deemed bad in law, consistent with previous decision. Assessee's ground allowed.
- Ground no. 6: Disallowance u/s. 40(a)(i) for payment to LMB Holdings Ltd. (Isle of Man) for films.
- No liability to deduct tax at source u/s.195, hence no disallowance u/s. 40(a)(i). Assessee's ground partially allowed.

Departmental Appeal (ITA No.4098/Mum/208):
- Issue: Disallowance u/s. 40(a)(i) for payment to PanAmSat Ltd.
- Upheld the order of CIT(A) based on previous decision. Revenue's ground dismissed.

Conclusion:
- Assessee's appeal allowed in part, while the Revenue's appeal is dismissed. Order pronounced on May 28, 2012.